Mayo Clinic settles with Minnesota AG over charity care, medical debt limits

Mayo Clinic has reached a legal settlement with Minnesota Attorney General Keith Ellison’s office that makes certain patients presumptively eligible for charity care and limits how the health system collects on medical debt.

The Rochester-based nonprofit healthcare provider, which denied wrongdoing and disputed the attorney general’s findings, will no longer collect debts through lawsuits other than in “extraordinary circumstances,” according to the attorney general.

The agreement between the healthcare provider and the state’s chief enforcer of consumer protection laws ended a two-year probe in response to allegations that Mayo Clinic was suing to collect on debts from patients who were eligible for charity care.

The settlement, filed in Ramsey County District Court on Friday, sets a threshold for the healthcare provider to maintain for its administration of charity care. It follows steps Mayo Clinic has already taken voluntarily, which the attorney general attributed to his office’s investigation opened in late 2022.

“In exchange for their tax exemption, nonprofit hospitals are supposed to give back to their communities by providing free or reduced-cost health care to folks with low incomes,” Ellison said in a statement, adding the findings uncovered evidence of “actively dissuading certain patients from seeking charity care.”

“While this is disappointing, I am heartened by the substantial improvements Mayo Clinic has made to their charity care program, and I am grateful for their cooperation with our investigation.”

Mayo Clinic denied any regulatory or legal violations in the agreement filed with the state. Spokeswoman Andrea Kalmanovitz said in a statement to the Minnesota Star Tribune that the settlement effectively “valid(ates) our longstanding commitment to ensuring all patients have access to the care they need, regardless of financial circumstances.”

No financial restitution or penalty was imposed as part of the settlement, Kalmanovitz said. She said Mayo Clinic “contests many of the findings reflected in the report” the attorney general issued along with his announcement, saying “those findings are inaccurate, speculative, or are irrelevant to applicable legal requirements.”

She also pointed to Mayo Clinic’s earlier voluntary adoption of practices aimed at helping financially challenged patients.

The attorney general’s office alleges the healthcare provider — and likely many others in the state — failed to abide by an existing covenant regulating the steps hospitals must take in offering financial assistance to eligible patients.

In its publicly shared report and legal filings on Friday, the attorney general detailed three documents that instructed Mayo’s billing department to “steer certain patients away” from such programs “in an effort to collect payment.”

For example, Mayo Clinic previously instructed employees “every effort must be made to collect [pre-service deposits] prior to engaging in conversations about charitable care” in one document shared in the report. Billing employees were also directed to encourage patients to pursue bank loans, borrow from family members or await Medicare coverage, according to the attorney general.

Another document “similarly instructed staff to divert patients seeking charity care toward other options and only offer charity care as a last resort,” the attorney general alleges.

Two of those documents were voluntarily discontinued and a third has since been modified to ensure patients receive proper information, according to the attorney general.

The attorney general also identified three cases where Mayo Clinic sued patients who “may have qualified” for financial assistance. In one cited example, the healthcare provider brought a lawsuit against a patient who submitted an application without a signature and then failed to return a second one.

Mayo Clinic financials shared in the attorney general’s report showed a period between 2020 and 2023 when the share of financial assistance decreased significantly. In 2024, however, the report notes the healthcare provider upped its financial assistance awards to nearly $142 million, benefitting 42,700 patients.

A series of stories published by the Rochester Post Bulletin beginning in 2022 prompted the attorney general to launch its review, the report says. More than 120 complaints related to Mayo Clinic were also received by the attorney general afterward.

The attorney general office’s investigators reached its conclusions in part through a review of Mayo Clinic’s internal communications and policy documents.

In November, Mayo Clinic disclosed a changed approach toward its presumptive eligibility and a tax filing that detailed a $90 million write-off of unpaid patient bills. The write-off included multiple years of debt and well exceeded the $37.8 million in hospital charity care provided in 2023.

Nonprofit healthcare providers are facing urgent calls from consumer advocates amid growing medical debt concerns. Medical centers are also facing increased pressure to make changes nationally through changes in state laws.

It’s part of an emerging trend where some health systems, pushed at times by state laws, are adopting or expanding presumptive eligibility with charity care programs. It can be an alternative to waiting for patients to complete applications for financial aid that some find confusing and difficult to navigate.

Healthcare costs across the state are on the rise as well as medical debt.

In 2022, the total costs of healthcare — about a third of which is attributable to hospital spending — rose to $66.8 billion from $42.1 billion in 2013, according to data from the Minnesota Department of Health. The state health department projects healthcare spending will reach $100 billion by 2031.